Globalization has had a wide-reaching impact on all the major industries across the world. Hollywood being one of the largest entertainment industries globally is also impacted by globalization. It has changed the business model and strategies which were prevalent earlier in the pre-globalization period. Hollywood has come to realize the potential and importance of foreign markets in the globalized world and is aligning its business of filmmaking to appeal to a more global audience outside the US. The article provides the impact of globalization on Hollywood and movie making business in America.
Impacts of Globalization
Hollywood is facing stiff competition from all the major film industries around the world in different aspects of filmmaking. However, to its credit, it still remains the global leader in filmmaking. In the year 2014, the top ten most profitable movies globally were made in Hollywood. Some of the major impacts of globalization on Hollywood are as follows:
Emergence of Foreign Markets
The economics of filmmaking has changed drastically post globalization. The majority of the revenue now comes from foreign markets. Keeping this in mind, Hollywood has to adjust its business and products to a new customer base, which is highly heterogeneous. The success of Hollywood movies is more driven by foreign markets these days. This can be understood from the example of the Marvel movie “Avengers: Age of Ultron” which debuted in theatres outside the US and made $200 million in its opening weekend. The fact that these $200 million were made from foreign markets before the movie actually released in the US, speaks about the potential of foreign markets for Hollywood movies, post-globalization. China which is the number two market for Hollywood movies is expected to surpass the American market by 2020.
Movies Made for Foreign Markets
Hollywood is also making changes to some movies to make it suitable for major foreign markets. When the word went around that in the Hollywood movie “Red Dawn”, featured Chinese villains, then the movie was criticized heavily in China. Fearing the movie will be boycotted by the Chinese, the villains were then digitally removed during post-production and replaced by the North Koreans. This speaks about the importance of foreign markets in the globalized world.
Globalization has provided easy access to credit to industries worldwide. Hollywood has also been using easy credit from global sources for filmmaking. Many major studios in Hollywood like the Walt Disney have bankrolled movies into Bollywood, with a view to tap the massive audience and enormous potential there. During the 2008 global recession, when Hollywood was struggling for movie financing, it got help from Bollywood and Indian sources.
Many countries impost tariffs and quotas on foreign movies. This is done to neutralize the perceived threat of cultural invasion by the Hollywood movies and also to protect the local film industry.
Hollywood is constantly reinventing itself in the light of globalization. The movies are being made with a global audience in mind and the focus is on leveraging key foreign markets. Globalization has opened new avenues for Hollywood to explore and remain the global leader in filmmaking.